By Chris Matthews and William Watts, MarketWatch

United Health leads the Dow up

U.S. stocks rallied closer to record levels Tuesday, as investors cheered a raft of largely upbeat corporate earnings reports while mulling the implications of a partial U.S.-China trade deal announced last Friday.

How are the major benchmarks faring?

The Dow Jones Industrial Average was up 256.83, or 1.0%, to 27,044, while the S&P 500 index gained 32 points, or 1.0%, to 2,998. The Nasdaq Composite index rose 96 points, or 1.2%, to 8,146.

The S&P 500 was about 1% below its record close of 3,025.86 set on July 26, while the Dow Jones Industrial Average was around 1.2% below its record finish of 27,359.16 set on July 15, and the Nasdaq Composite was around 2.3% away from its record close of 8,330.21 scored on July 26.

The Dow edged 29.23 points lower on Monday to end at 26,787.36, a loss of 0.1%. The S&P 500 closed 4.12 points lower, down 0.1%, at 2,966.15, while the Nasdaq Composite lost 8.39 points, or 0.1%, to finish at 8,048.65.

Read:5 prominent U.S. companies are most at fault for the earnings recession (http://www.marketwatch.com/story/5-prominent-us-companies-are-most-at-fault-for-the-earnings-recession-2019-10-14)

What's driving the market?

The third-quarter U.S. corporate earnings reporting season kicked off Tuesday with results from the nation's largest banks, reflecting a relatively healthy U.S. consumer and a more wary business sector.

Shares of JPMorgan Chase & Co. (JPM) rose after reporting revenue and earnings (http://www.marketwatch.com/story/jp-morgan-chase-beats-profit-and-revenue-expectations-stock-rallies-2019-10-15) that rose more than expected on the back of its consumer banking division, while Wells Fargo & Co.(WFC) was also up after it reported a surprise increase in revenue (http://www.marketwatch.com/story/wells-fargos-stock-falls-after-profit-miss-but-revenue-surprises-to-the-upside-2019-10-15), though its third-quarter profits fell more than expected.

Citigroup Inc.(C) shares gained after reporting quarterly sales and profits that beat expectations, while Goldman Sachs Group Inc. (GS)(GS) reported a steep 26% decline in profit (http://www.marketwatch.com/story/goldman-profit-falls-26-as-market-wobbles-2019-10-15) from the year ago period, reflecting weakness in the mergers and acquisitions market and debt and equity underwriting.

"It's a better time to be a traditional, consumer-facing bank than more of an institutional or trading bank," Stephen Biggar, director of financial institution research at Argus Research told MarketWatch. "Underwriting and financial advisory were weak spots [in the third quarter], but the consumer is by and large steady-as-she-goes," he added.

UnitedHealth Group Inc. (UNH) provided Tuesday's most impressive earnings release, after earnings and revenue came in above expectations (http://www.marketwatch.com/story/unitedhealths-stock-jumps-after-earnings-rise-above-expectations-and-guidance-raised-2019-10-15) and after the health-care services company raised its full-year outlook.

However, S&P 500 index company earnings are expected to fall 4.6% in the third quarter, according to FactSet. This would be the first time that index company earnings have fallen for three straight quarters since the fourth of quarter of 2015 through the second quarter 2016, FactSet analyst John Butters said.

Earnings forecasts focused on headwinds from the global economic growth slowdown and international trade policy uncertainty, with profit margins seen under pressure. However, corporate buybacks are again seen supporting earnings per share.

"Corporate America is unlikely to deliver much, if any, earnings growth in the third quarter," LPL Financial chief investment strategist, John Lynch said. "However, we think better days lie ahead. We expect progress on trade to keep U.S. economic growth at or above the trend for the current economic expansion. The U.S.-China trade conflict is unlikely to be resolved anytime soon, but we believe any small steps forward could increase business confidence and spark capital investment, lifting corporate profits."

Check out:Banks look to put earnings recession in revers, but aren't expected to succeed ()

Enthusiasm over a U.S.-China trade deal boosted stocks at the end of last week, but analysts said a lack of detail around planned tariff increases and other elements damped enthusiasm, leaving stocks to drift lower on Monday.

"The latest twist in the U.S.-China trade conflict is yet another reminder to investors not to get caught up in the hype," said Han Tan, market analyst at FXTM, in a note. "Trying to bridge the conflicting interests between the world's two largest economies is a gargantuan task; an undertaking that has already proven to be protracted and complicated."

Speaking with reporters in London, St. Louis Fed President James Bullard said investors might be too optimistic about how long it takes to reach trade deals (http://www.marketwatch.com/story/bullard-says-pandoras-box-has-been-opened-on-trade-that-will-take-a-long-time-to-resolve-2019-10-15). He also emphasized that data on consumption, while strong, was "backwards looking" and said that was why he has been "emphasizing these downside risks and also emphasizing pre-emptive types of action to stay out of recession." Bullard dissented last month (http://www.marketwatch.com/story/feds-bullard-dissent-was-due-in-part-to-worries-about-slowing-economy-2019-09-20) from the Federal Reserve's decision to cut interest rates by a quarter point, calling instead for half-point decrease.

In its World Economic Outlook, published Tuesday (http://www.marketwatch.com/story/imf-sees-global-economic-growth-falling-to-3-this-year-slowest-pace-since-2008-financial-crisis-2019-10-15), the IMF sees global economic growth falling to 3% this year, the slowest pace since the 2008 financial crisis.

Which stocks are in focus?

Dow constituent Johnson & Johnson(JNJ) reported earnings and revenue that rose more than Wall Street estimates (http://www.marketwatch.com/story/johnson-johnson-shares-rise-after-earnings-beat-estimates-company-raises-guidance-2019-10-15), while the company raised its full-year guidance.

Shares of BlackRock Inc.(BLK) were on the rise after reporting a smaller-than-expected fall (http://www.marketwatch.com/story/blackrock-profit-slips-8-in-q3-2019-10-15) in profit.

How are other markets trading?

The yield on the 10-year U.S. Treasury note rose to 1.754% (http://www.marketwatch.com/story/treasury-yields-tumble-as-investors-cut-back-trade-deal-expectations-2019-10-15) from 1.748% late Friday. Bond markets were closed Monday for the Columbus Day holiday.

In commodities markets, West Texas Intermediate crude oil fell about 6 cents (http://www.marketwatch.com/story/oil-weaker-but-pares-decline-2019-10-15) to $53.53 on the New York Mercantile Exchange and gold futures ticked down $13 to $1484.70 on Comex.

European stocks on Tuesday rallied on optimism over the possibility of a deal for an agreed Brexit pact as well as better-than-forecast U.S. earnings. The Stoxx Europe 600 ended 1.1% higher at 394.02, its best level since May 22, 2018.

In Asia overnight, stocks trade mixed with Japan's Nikkei rising 1.9%, the China CSI 300 falling 0.4% and Hong Kong's Hang Seng index falling 0.1%. In Europe, stocks were mostly higher, as the Stoxx Europe 600 added 1.2%.

(END) Dow Jones Newswires

October 15, 2019 12:53 ET (16:53 GMT)